What is weighing down the AMP share price today?

Posted: 27 September 2021 12:46 pm
News
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Shares in the financial services giant have slid more than 38% so far in 2021.

Investors in AMP (ASX: AMP) have had little reason to cheer over the last 2 years as legal and management woes have beset the wealth management giant and dragged its shares down nearly 80%.

News has not improved with Monday's trading revealing another 1.5% drop to 97 cents in early trading.

Why is the AMP stock price slipping?

The latest drop comes on the back of the news of further legal woes for the embattled company, with Sydney-based financial adviser Centurion suing AMP for breaching the terms of a 2015 buyout contract.

According to the Australian Financial Review, former AMP employee and Centurion's founder William Nelson signed an agreement to sell his business, which was a financial services licensee for AMP and was started with a loan from AMP, back to the company when he retired.

Centurion says AMP changed the terms of its buyback agreements in 2019, adding extra restrictions on payouts. As a result, it alleges AMP reduced its payout from $955,471 to $300,000, even though AMP's Charter Financial Planning subsidiary had said the changes wouldn't affect buyouts for businesses such as Centurion that lodged their buyout notices by November 2019 and exited their businesses by May 2021.

Centurion lodged its claims to the Federal Court of Australia on 17 September.

Ongoing challenges

The latest legal challenge for AMP follows a class action lawsuit filed last year by current and former financial advisers seeking damages for the wealth giant dishonouring longstanding contract terms.

Australia's corporate regulator has also opened civil proceedings against 5 companies linked to AMP for allegedly charging life insurance premiums and advice fees to customers even after their deaths.

The wealth giant has struggled since the findings from the Financial Services royal commission in 2018 of widespread misconduct at the company, which prompted the exit of senior executives and left AMP struggling with top leadership issues since then.

Former ANZ executive Alexis George took over as the latest AMP CEO in August in the midst of the group's plan to spin off and list its mammoth private markets investment arm AMP Capital.

Investors have been pinning their hopes on efforts to restructure the company as well as the launch of a $200 million share buyback, but this has failed to bolster the company's market value so far. AMP's share price is down more than 38% so far in 2021.

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